Commentary on Thompson fresh prices hits hot button

No other name in the California wine industry evokes more instant emotions than Gallo. It ranges from loathing to fear to admiration. Therefore, it was not surprising comments in this space about how Gallo — and indirectly the other major Central Valley wineries — hung out to dry Thompson growers this year brought a few e-mail responses.

Thompson growers were left to wait until October before Gallo “announced” its Thompson price of an insulting $100 per ton. Some growers panicked before then and took $60.

Thompson growers were left to scramble to find pickers to lay down raisins in a short labor supply market. Some were laying Thompsons into October.

While the price was an insult in what was supposed to be a year at least equal to last year's $200 per ton price, it was the timing that really made grape growers angry as Carson Smith of Fresno, Calif., president of the Central California Winegrowers said in his e-mail:

Harry,

“I just read your commentary regarding winegrape and Thompson pricing. You also have hit the nail on the head regarding this year's pricing mess. Thank you for stating publicly what too many people are afraid to say. That is, that besides the price being lower than market conditions seemed to justify, the timing of this pricing this year is the real crime. If some of the wineries didn't need to purchase Thompsons they certainly knew that much earlier in the season than when they finally came out with their price. This left many Thompson growers with limited (and undesirable) options late in the season.

“You are also on the money stating that the surplus should be gone due to the acreage pulled out. A late summer article by the Ciatti Co. displayed the reasons that demand for concentrate and wine grapes should have lead to prices about as strong as 2004 or slightly better for most varieties.

“Keep up the good work and we appreciate the help and notice that you have given us here in Central California.”

Carson Smith

Read the next e-mail if you think that one is strong.

Dear Mr. Cline,

“Just read your article in the Western Farm Press of Nov. 5, 2005. Excellent, excellent article. We farm some Thompsons and were in exactly the position you describe in your well-written piece. Luckily, we have some other varietals which will help pull us through this year and we do some custom farming, too, in southern Madera County.

“As the wife of a farmer and the mother of one, too, I cannot tell you the rage I feel towards Gallo…wasted energy, I know. How does a member of the Gallo family look at themselves in the mirror every day? They are multi-millionaires yet continue their ruthless, ruthless ways to the detriment of every farmer large and small with whom they deal and others with whom they do not…their actions have repercussions worldwide.

“I have asked my husband “why doesn't someone do something so this doesn't happen?” There MUST be some smart farmers out there who can figure out a way to bypass the outlaws like Gallo…there has to be some payback here…please don't tell me we have to wait until the hereafter for payback…truly it's a wonder to me why some angry and depressed, hopeless farmer has not “taken care of” the Gallo headquarters — please, this is not a call to violence and I mean none, but it is still a wonder to me how Gallo continues to exist in their ivory tower in Modesto. They are mean, mean people. Some call them smart business people…that's a given.

“Thank you for your article and I am saving it. I wish I could figure out how to do as you say — form a bargaining association. Why hasn't it been done sooner?”

Now that is one angry farm wife, but that is only half the story. Obviously, an e-mail like that deserves some print ink and I asked the woman if I could use it. Here is her response.

“Can you publish my letter “anonymously”? I just don't want repercussions, as we do have to deal with the wineries. I guess this is the coward's way out.”

I responded:

I thought that might be your response. However, I understand completely.

Best wishes to your family and hang in there. I have a longtime friend who farms in Monterey County. He is one of the true survivors there. A couple of years ago he jokingly said he felt a tinge of guilt when wineries had to pay him $1,400 per ton for his Merlot one year. His guilt disappeared quickly when he recalled the days they paid him $200. Hang in there; the wineries are killing themselves with the grower games. Some day they will beg for your grapes and when that day comes, stick it to them for all it's worth.

It is a sad testimony for an industry where suppliers are so fearful of their buyers that they are afraid to challenge them publicly. It is little wonder the industry continues to struggle while at the same time importers from Australia and other countries come into the U.S. and take market growth away. An industry divided is easily left to flounder and stagnate.

The woman's final e-mail response:

“Thank you so much for your gracious comments…in some ways, the farmer gets what he/she deserves. I just find it so hard to believe that some really smart guy has not come up with a way to combat the wineries' tactics before now!

“I appreciate your thoughts and thank you.”

Another e-mail:

“It is definitely a monopoly. It can be a tough business. Keep up the real articles.”

Thanks,

Tom Bergin Bergin Farms Farmington, Calif.

I took a bit of a potshot at coastal growers in that initial commentary and it elicited this e-mail:

“Just read your Nov. 9 column in Western Farm Press and believe you have made several needed points. While, here in the North Coast, raisins are far from our minds - other than munching on them — the issues facing grape growers are quite similar to those further south. Few growers I know believe we're in bed with the wineries. On the contrary, we constantly feel strong downward pressure from them on prices while, at the same time, they want to dictate viticultural practices and impose their ideas on the appropriate time to harvest - based on their own “ripeness” criteria, a totally subjective assessment that cannot be quantitatively measured.

“But what also caught my eye, and the prime reason for writing to you, was your comment concerning the prospect of a “wine grape bargaining association.” I've just written an article on that subject for our own Vineyard Quarterly newsletter to be published next month.

“Central Valley wine grape growers are not alone in being vulnerable to winery pricing pressures. It is just the scale that is different.”

Paul Bialla President, North Coast Grape Growers Association

On Page 7 of this edition of Western Farm Press is the article Bialla's wrote for the association's newsletter.